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Papa John's Schnatter Says He Will Honor Obamacare And Give Health Insurance To All Employees

In an op-ed written by Papa John’s CEO John Schnatter and published in The Huffington Post on Tuesday, Mr. Schnatter suggests that his intentions regarding the implementation of Obamacare for Papa John’s employees have been misunderstood and that he plans to provide health care benefits to all of his corporate employees along with all employees working in his company owned stores.

Writes Schnatter-

“Papa John’s, like most businesses, is still researching what the Affordable Care Act means to our operations. Regardless of the conclusion of our analysis, we will honor this law, as we do all laws, and continue to offer 100% of Papa John’s corporate employees and workers in company-owned stores health insurance as we have since the company was founded in 1984.”

This is good news, indeed.

Papa John’s—and Mr. Schnatter himself—has been the subject of considerable criticism, including in this column , as a result of what has been believed to be his plan to avoid the requirements of the Affordable Care Act by cutting back employee schedules to less than 30 hours per week. Such a move would have exempted Papa John’s from the law’s requirements, resulting in employees not only being denied healh insurance but further punished by losing a large percentage of their income.

According to Mr. Schnatter, his plans with respect to his employees—and the requirement to provide them with a health care benefit—were taken out of context based on remarks he made when speaking to an entrepreneur class at a Florida college.

“Schnatter estimated that these rising costs could adversely affect his workers. Since only full-time employees working 30 hours or more must be covered under the new law, he said he expects franchise owners will be forced to cut employees’ hours because they can’t afford the costs of health insurance plans. ”That’s probably what’s going to happen,” he said according to NaplesNews.com. “It’s common sense. That’s what I call lose-lose.”

And then there was the conference call with Papa John’s shareholders earlier this year where Schnatter added, “We’re not supportive of Obamacare, like most businesses in our industry. But our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare. If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs (emphasis added) and core strategies to pass that cost onto consumers in order to protect our shareholders best interests.”

On that same call—and on other occasions—Schnatter indicated that the additional cost for a pizza could rise by 11 to 14 cents per pizza, however, Forbes writer Caleb Melby estimates those costs to be closer to 4 cents per pie.

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I have no doubt businesses will pass the cost off to the consumers. You don’t get affordable healthcare without paying more someplace else. Your two examples (Papa Johns and Dennys) have very small profit margins as most restaurants have. I’d like to see what the impact will be on other sectors like retails (Target, KMart).

This article tends to look at the Papa Johns founder who has done well due to the success of his franchises. We don’t know how he spends his profits or what he donates. What we DO know is he has hundreds of independent franchises that have created jobs. It’s those small, independent franchise owners that will have to deal with these new requirements. Personally, I have no problem with the decisions made regarding Affordable Healthcare. But supporters have to realize there will be unforeseen consequences and those must be accepted.

According to YCharts financial data on Papa Johns, they have made between 39 and 43% profit margin every quarter consistently since 2008. Denny’s, between 31 and 39%, and growing every year. Walmart, 24-25%. Is that what you consider a small margin? Personally, I’d take that as a profit margin in my construction business any day of the week.

And also, is it really so hard to imagine the franchisees adding 15c onto a $10 pizza? I dont think its going to break the bank for anyone. Unless they start thinking of the 15c extra cost as a profit centre, so that they can dupe their customers into paying $1.00 extra for the pizza – meaning 15c to Obamacare, 85c to franchisees and shareholders!!!

“…supporters have to realize there will be unforeseen consequences and those must be accepted.” Really? Let’s also think about the benefits (seen and unseen) that having a populace with access to health care might bring…oh, I don’t know, improved productivity, lower turnover, less sick days, living longer and healthier…benefits will outweigh any consequences by a larger margin than Papa John’s profit margin.

Mr. Schnatter is not “giving” his employees Obamacare. He [will be] spending his stockholders’ money to comply with the law. Some combination of higher prices, reduced portions, reduced employee hours, reduced employee head count, increased productivity via automation, etc will be used to offset the higher costs. We’ll have to wait and see how it all shakes out but the smart money says it won’t be good for the employees at the lower end of the skills/compensation ladder.

Yes, that is always the excuse. We can’t raise minimum wage because that will just hurt employees at the lower end. We can’t increase worker safety because that will just hurt employees at the lower end. We can’t provide health care because that will just hurt employees at the lower end. The list of things we can’t do “because that will just hurt employees at the lower end” is limitless. Any possible action that might make things better for employees will really only hurt them.

Rubbish. Time after time after time, economic studies have shown those at the lower end of the economic scale are helped and help considerably by stronger legal protections. People earn better wages in safer work environments and gain better benefits.

The time has come to stop relying on the tired, old and thoroughly discredited theories of conservative economics and look at what really happens. Tax cuts don’t create more government revenue, jobs, or economic progress. Testing students constantly doesn’t produce better students. Charter schools don’t do better that standard schools (as with most things, some charter schools are better than regular schools, some are worse. On average, the two produce remarkably similar results). The private sector insurance companies do not provide better coverage for less than Medicare.

If employers really don’t want the burden of providing health insurance, they should stop whining and get behind the movement for single-payer, government-sponsored health care, the best system for providing the best possible health care to the largest number of citizens at the lowest possible price.